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The period between 1807 and 1820 saw embargoes and trade restrictions – and ultimately resulted in a war between the United States and Britain.

In 1807, Great Britain was at war with Napoleon Bonaparte's France. The British were helping to finance Russian, Prussian, and Austrian armies and provided naval support by blockading key French ports. As the war with Napoleon progressed, the British war effort demanded that more sailors be found to block France and fight the French navy.  One way Britain sought to replenish its crews involved boarding vessels in search of former British citizens, whom Britain contended were still British citizens from "birth to death." Thousands of U.S. sailors were impressed into the British navy (some estimates range as high as 15,000 Americans were taken off American ships and boats). 

In 1807, the British bullying behavior of impressment finally crossed the line by violating U.S. sovereignty. On June 22nd, 1807, the British warship H.M.S. Leopard, waiting in U.S. waters at Hampton Roads off the coast of Virginia, attacked and captured the U.S.S. Chesapeake. Across the nation, when informed of British impressment of U.S. sailors on the U.S.S. Chesapeake, U.S. citizens and government leaders were angered by the British affront to American sovereignty (Britain's action was considered a huge insult to the honor of the young republic – and by some, an act of war). As the news spread across the country, the furious American nation clamored for war (except for the traders of New England who feared war would be bad for business).

Then president, Thomas Jefferson believed the United States was unprepared to take on Great Britain in a war – but the Chesapeake Incident clearly called for a hostile U.S. response. Instead of responding militarily, Jefferson reacted by ordering all British ships out of American waters. Congress responded by embarking on a campaign to build more American warships. Next, Jefferson called all U.S. warships home from foreign service. 

Still, more concrete action was called-for to demonstrate America's displeasure with British impressment and trade interference, and that action would be passive/aggressive. A few months after the Chesapeake Incident, in August of 1807, Jefferson formally changed U.S. policy toward Great Britain, forming his "peaceful coercion" policy – economic sanctions restricting trade with Britain.  In December 1807, Congress passed Jefferson's Embargo Act, which prohibited American ships from trading with foreign nations. And the standoff began...

Eastport ignored Jefferson’s Embargo Act. Trade with British North America was Eastport's lifeline. Without trade, the whole Eastport economy would collapse. Eastporters believed that "those fools in far-away Washington, D.C.," by declaring an embargo, were interfering with Eastport's livelihood and way of life. And this interference from a remote government (albeit their own federal government) would not be tolerated... 

In the Spring of 1808, aware of the vast amount of smuggling taking place on the border, President Jefferson decided to send a United States sloop of war (“The Wasp”), along with the frigate U.S.S. Chesapeake (yes, the same ship boarded by the British earlier) and several gunboats to Passamaquoddy Bay to quash cross-border smuggling. Jefferson’s Embargo, however, was a major failure – hurting the entire U.S. economy.

As part of a national defense system, in 1808, Congress funded the building of several "second system" forts and batteries at various locations along the U.S. east coast. In Maine, forts or batteries were built at Kittery, Portland, South Portland, Phippsburg, Boothbay, Edgecomb, St. George, Castine, Machiasport, and Eastport. Given its growing importance as a trade center, Eastport was chosen as the home for one of these new forts. That fort would be named "Fort Sullivan."

Jefferson’s presidency was followed by that of President James Madison.  To further restrict trade with Great Britain and its colonies, Madison had Congress pass his “Non-Intercourse Act of 1809,” an act that outlawed trade with Britain and France, including British North America. Lasting from August 1809-May 1810, Madison's Non-Intercourse Act of 1809 failed to stop trade with the British and the French.  U.S. retaliatory trade restrictions, yet again, proved to be ineffective.

On June 18, 1812, the United States, tired of British interference with its trading and settlement affairs, finally took military action, declaring war on Great Britain. The War of 1812 lasted just over two-and-a-half years, from June 1812 through February 1815. During the war, Americans would attempt to take Canadian territory, fight the British and Indigenous People in the Ohio River Valley; suffer the burning of the nation's capital; lose several land battles and win a few; the navy would lose a major sea battle at Castine, Maine; and the U.S. would win several sea battles in American waters and abroad. 

During the War of 1812, until 1814, Eastport had experienced very little military action. But, as part of a new, organized offensive to form a new British crown (to be known as "New Ireland”), on July 11, 1814, three months after the 1st Battle of Moose Island, the British sent a much larger force to defeat Fort Sullivan and capture Eastport. The British plan was to capture the entire coastline from Castine all the way up to Eastport, reviving their Revolutionary War plan to establish “New Ireland” in present-day Maine. Had Great Britain succeeded with its plan, and had it maintained ownership of Down East Maine after the War of 1812 (instead of giving back its captured territory), Eastport would have been part of British North America (now Canada). 

Only four months after the British captured Castine (southwest of Eastport), the War of 1812 ended (December 24th, 1814). Accordingly, the British gave up the land they had captured from Castine up the coast to Lubec with the Treaty of Ghent. Britain, however, refused, however, to return Moose Island/Eastport to the United States.  During the arbitration, it was argued that Eastport belonged to America because American citizens had fortified the town (Fort Sullivan). This argument proved convincing, and the British finally relinquished Eastport on June 30th, 1818, three and a half years after the treaty had been signed. In short, Fort Sullivan ultimately defended Eastport from capture.

As the United States and Great Britain approached the 1820s, mercantilism was starting to disintegrate in favor of a new economic approach: "reciprocity" (in essence, free trade). Reciprocity would ultimately overcome mercantilism as the basis for international trade.